Seven years after Evonik Oil Additives opened its first plant in Asia-Pacific on Jurong Island, Singapore, the company has doubled the plant’s capacity.
Yesterday, during the press conference with top company executives, the company revealed that it is planning on either further expanding the Singapore plant (there’s still room in the two-hectare site) or building another plant elsewhere in Asia. Evonik did not disclose the plant’s original, as well as upgraded, capacity, as well as the amount invested so far in the plant.
“Our [original] decision to go for Singapore is a multiple of criteria. IP [intellectual property] protection is one element but is not the decisive element,” said Peter Meinshausen, regional president, South East Asia, Australia & New Zealand, of parent Evonik Industries.
“Proximity to market is also a key issue,” Meinshausen said. “Evonik can ensure that our customers’ needs are catered in Asia for Asia.”
The Singapore plant now represents 40% of Evonik Oil Additives’ total global capacity and is the largest of five plants, signifying the importance of the region for Germany’s Evonik Industries’ oil additives business line.
China is now the largest lubricants market in the world, thus, it seemed to be a logical contender back in 2008. But, “while China is an important market, it is not the only market,” said Meinshausen. “It is important to find a location which is central. Yes, cost in Singapore is not on the cheap side, but accessibility of market is important,” he said.
Meinshausen added that the strong support provided by the Singapore Economic Development Board (EDB) for the recent plant expansion, as well as the original investment, was important. Singapore’s economic climate makes investing easy in the island-nation, he said.
“This is another reason why Singapore is so important for us.”
According to Beh Swan Gin, EDB chairman, companies across the entire lubricants value chain have invested more than SGD 400 million (USD 301 million) in Singapore over the past two years.
“Singapore, as a leading regional distribution hub and one of the top bunkering hubs in the world, is well-positioned to take advantage of the strong demand for lubricants in Asia,” he said.
“The global market for lubricants is expected to grow strongly in the upcoming years,” he said. “With an estimated CAGR [compounded annual growth rate] of 2.5%, the lubricants market size is expected to reach USD 70.32 billion by 2020. Asia Pacific will be the fastest-growing market, representing 40% of global demand.”